Prada Brings Versace Home: A Bold Move to Unite Italian Luxury Brands

Prada said it agreed to buy Versace from Capri Holdings for $1.375 billion, including debt, in an effort to create an Italian luxury-fashion leader. The deal is an attempt to consolidate Italy's position in an industry historically dominated by conglomerates based in France. Prada's chairman, Patrizio Bertelli, said in an interview that the company seeks to build upon Versace's iconic brand while applying Prada's strong infrastructure and knowledge. This is an offer at quite a discount to the $2.15 billion at which Capri acquired Versace in 2018. Prada expects to be able to attract new customers by combining Versace's dramatic designs with its minimalist brand image. CEO Andrea Guerra said Prada saw big potential in Versace and highlighted the importance of strategic implementation. This purchase is significant following recent cancellations of various deals due to instability in global markets and economic uncertainty triggered by new U.S. tariffs. Prada has steered clear of big deals in large part since the late 1990s, so this is a turning point for the company.

This purchase puts Versace back in Italian ownership following its sale in 2018 to U.S.-listed Capri Holdings. Although Italy produces more than half of the globe's luxury products, its absence of an equally large luxury conglomerate, such as those found in France in the form of LVMH and Kering, has been an issue. Prada, Italy's largest luxury brand in terms of revenue although smaller in market capitalization, is now aiming to consolidate its position using this purchase. CEO Andrea Guerra, who was appointed in 2023, and heir apparent Lorenzo Bertelli spearhead this ambitious expansion. The acquisition is an indicator of an overall desire among Italians to shield and develop family-based brands at home against foreign acquisitions. Other Italian luxury brands, including Moncler and OTB Group, have sought out smaller acquisitions, yet the industry remains fractured. Analysts see Prada's foray as a big and stronger effort at expansion than in its previous purchases.

Prada stock climbed almost 5% on Thursday, albeit still down 7% for the week. Shares of Capri showed mixed action, jumping earlier in the day but dipping in premarket trading. The deal is significant in light of recent widespread deal cancellations due to market jitters and financial worries fueled by recent U.S. tariffs. Prada has held back largely from big deals since the late 1990s, so this represents a turning point for Prada.